In a major diplomatic and economic breakthrough, Prime Minister Narendra Modi on Saturday, February 7, 2026, hailed the finalization of the India-US interim trade framework. Describing it as “great news” for both nations, PM Modi emphasized that the deal would supercharge the ‘Make in India’ initiative and create vast employment opportunities.
The agreement officially de-escalates a year-long trade standoff, providing Indian exporters with a massive competitive edge in the $30 trillion US market.
Key Highlights of the Trade Deal
The deal effectively slashes the total tariff on most Indian goods from 50% down to 18%.
| Component | Previous Rate | New Rate (Feb 7) | Status |
| Reciprocal Tariff | 25% | 18% | Reduced |
| Russian Oil Penalty | 25% | 0% | Removed |
| Effective Total | 50% | 18% | -32% Change |
- Zero Tariffs: Indian exports of generic pharmaceuticals, gems and diamonds, and aircraft parts will eventually see duties drop to zero.
- Sector Winners: Immediate benefits for labor-intensive sectors like textiles, leather, footwear, home décor, and organic chemicals.
- India’s Commitments: India will reduce duties on US industrial goods and agricultural products (soybean oil, tree nuts, fruits, wine, and spirits) while maintaining protections for sensitive sectors like wheat, rice, and dairy.
The “Russian Oil” Factor & Energy Pivot
A central pillar of the deal is India’s strategic shift in energy procurement:
- The Penalty Rollback: President Trump signed an executive order revoking the 25% penalty tariff imposed in August 2025 due to India’s Russian oil purchases.
- Purchase Pledge: India has reportedly committed to purchasing $500 billion worth of US energy products, aircraft, and technology over the next five years.
- Strategic Sourcing: While the US claims India has “committed” to halting Russian oil imports, the MEA (Ministry of External Affairs) maintained a nuanced stance, stating that “diversification” based on market conditions is the core strategy to ensure energy security for 1.4 billion people.
Impact on “Make in India” & Employment
PM Modi and Commerce Minister Piyush Goyal highlighted the long-term domestic benefits:
- Job Creation: The surge in exports is expected to generate lakhs of new jobs, particularly for women and youth in MSME hubs.
- MSME Boost: Lower entry costs into the US market will allow small-scale Indian entrepreneurs and startup innovators to compete globally.
- Supply Chain Resilience: The deal positions India as a primary “trusted partner” and a critical counterweight to China in the global supply chain.